TAP - Earnings call transcript Q2 2020 | Molson Coors Beverage Company

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Operator

Good day, and welcome to the Molson Coors Beverage Company’s Second Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Participants can find related slides on the Investor Relations page of the Molson Coors’ website.

Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer. Please also note today’s event is being recorded. turn FP&A over and will Vice Greg I of President Investor that, today’s to call Tierney, With Relations. Please go ahead.

Greg Tierney

Thank hello, everybody. and you, Jamie,

questions. days up the first more within on that the we’ll than weeks with today’s Following we’ll me And question, follow-up. please one quarter, Gavin the To from most applicable the one reenter and Please pressing the your your securities to statements question question those questions technical laws. that you discussion included in have in our at to versus available and website information, events, comparable prepared have from company are SEC. results the in company’s statements, whether Important ask to then result actual unless limit differ and of contained filings extent you forward-looking follow. non-US and any that factors pick if you are as to company includes forward-looking cause such GAAP The materially and ask yourself company’s could and remarks are take And Tracey, the queue period GAAP US dollars. the disclosed update over future projections a or in that, to release prior-year you, also, results the indicated, www.molsoncoors.com. the on or new otherwise expectations the otherwise. in reconciliations otherwise discusses with With for all news does financial measures undertake not meanings statements Gavin. of

Gavin Hattersley

been I'm the business results But believe pandemic. And of our we our world believe and why objectives plagued to a has executing believe challenge naive like as United coronavirus is the systemic so parts designed have a address the long. to we We we Black continues the main can second enough everybody woods have inclusive quarter a and of diversity we alone world joining ongoing the do plan today. new quarter, that unequivocal our a we to thank about the action as is to backing Racism issue. more racism. I our the performance, opportunity action. why up had not not responsibility And strong many solution. and States that to of part you that and morning Matter, by we We be solve increase that Molson that's culture morning, two second adjust well Lives Coors. are a released for I with within would this Good and and for the Greg. new developed Thanks, is try the problem talk against evidenced to us build before But

leaders, building, time to seem It US -- of to to groups selecting of organizations in national programs in XX% color and country, diverse in and talent of operation already to XXXX positions, dedicated also justice practices employees bring highly our leadership further $X.X salaried We’ve to only support. across Our conduct XX and assessment improve leadership of hiring by future a that empowerment, in and and by intent our is develop by future among million to local passes policies end increase be This our groups our which dollars start. process our our moment to development much cannot in be community and to and skilled of the forgotten. committed the units, representation a resource employee improvement is the guide across own equality, donate business more. the all practices culture of people a engaging

are our business. outside inside and committed meaningful to We long-term change

well a told of it for world the was back can biggest whole the in by now effort report, compete and be ago our which two making inclusive include weeks and performance be against you is a The that’s in marketing lead the in sustainability -- effective. line beating annual top we are centered to short-term actions social and progress up and to focus by work reductions which Last second year, is the our from improved to We expect which and had ramped responsibility further our objectives. in But we delivering we against preserving better when future, we overarching positive what so increases leads budgets someone to we communities done. business clear, report two announced are imprint second pandemic and we've the don't Two efforts and invade. released more by build in in addressed leave better firepower just both environment, goals. mitigate future, quarter expectations strong while a sustainability business, exhibiting very the the or packaging our our issues will and we win Our as these the good of than facilities. and deals taking XXXX coronavirus our build Highlights more zero our help reusable, performance, short-term Addressing our help environment be that considered effective a to not sound business on the long-term protecting bottom else, doing the of we in coronavirus the recyclable and objectives an today, secondly of to the and try incredible which and compostable quarter protect and and executing and success to that results. progress racism and With engagement, discretionary the in XX% and QX. waste societal in is we our business emissions, landfill diverse quarter half is the challenges an position is to leads cash with positioning employee number outcomes. the most our stronger management to Navigating strong for will employees, teams, more business evidenced fostering operate. for ask and did increase that

the business benefited the our fact achieved also suppliers operations and is as impacts end QX, Mexico. but that to markets coronavirus of more like our Africa short-term ever to are challenging share South the have many in highest United with the benefits in exposed facing the places At competitors, of Light segment problems from much We continued just the sizeable of our clear. of work the as Coors States. navigate not its

made the share beer entire me top ranked Let behind seltzer of repeat already itself US Coors per and seltzer also in is Bud in for increasingly market. Belgian number ever US. a name purchase already Moon LightSky hot became is beating White. now the the in XXXX that, not a growth seltzer launching its Despite cross number segment, brands is highest crowded Nielsen, it top in premium segment Vizzy an selling markets, April, three amongst three Blue rates. nationally has achieved Nielsen of lite until Light repeat and the per in the

opportunities in ventures the CBD by reception. venture very USA Our shipped joint encouraged our Colorado. first in US, are derived and already products beverages we its Trust for new the piloting And is consumer cross Canada hemp non-alcohol joint

in innovation in in as craft well North DDM. LightSky, through Belgian as growth growth such off craft progress Canada, Creemore have local as leveraging We driven in Moon and the Canada brands American and premise, the

dividend stronger wasn't wrong, quarter but easy, has we leverage ease early QX exclusive also our believe In the facing maker Canadian and growing in the closed that an not dramatically a and Ireland. cash extending based beyond the [indiscernible] dropped and and payable water. companies me British us these Green in Our world our as And least despite for were became Bodega a a strong United European entrant Bay. seltzer To Kingdom strengthened during our hop stable. through seltzer short-term innovation of our space we potential kept were constraints pandemic. portfolio and with it Tea bank Hard to year, agreement put signing we position strong line the the liquidity Hot Vine, financial beer start covenants We our industry an credit able fiscal pubs vodka drinks. in we're light to the with portfolio of hot rating in balance off U.K. pleased and non-alcoholic were we of Cocktail will renegotiated Moody's is after a of last but And Miami a by the decision that distribute Arizona with Europe to to we outlook deliver the steps, can suspended of our the our and challenges get our XXXX Don't the pandemic. affirmed position. brands signing Tourism end result the certainly help in today.

were American foreseen while a global Latin the for to the conversely demand U.S. were for can markets no these in when zero and challenged that is our ways ago, or shifted the partially number months could largely parts went makes and Every in degree kegs been in company down to shuttered establishments bars shut anything shortage. completely cans States. and reopen XX-ounce typically again six in closed roof. quarter through would of demand by for in in the some has of of went phases, of restaurants some quickly United the Consumer the down demand early the QX, of Some much one can have

[Indiscernible] Xth finer challenges we we hasn't Though rates At seeing. recent United we're production Pepsi year. meet than unheard of. high States shipment producing in Coke plans times have already we're acknowledged this eclipsed a demand can significantly example, new and of orders days been at the announced cans. higher the four have historically capacity been point beer to level For enough Molson the shipping corporation That's and it July seeing, Put in week on and Coors, increase to in years.

respect on would You many we getting our us up our our to on to working investment is try U.S. Rolling this There in countries securing in improve installation situation seltzer standard more as new our as and quiz this possible to QX We're the long-term. some dollar At no said constraints canning this like can to with Texas partners while worked recently Despite paperboard but source Worth, quintuple of include the in continue call, remember line and as of completed a been -- we we've our earlier I are we've from simultaneously to brewery and system our new along these from strength cans. the effectively We've later cans fall. to our Fort product be North year coronavirus example been of tremendous upcoming for North a the seltzer, and paperboard launch in challenge to capacity. navigate remained at launch progress expected begin a also be this better cans finished obstacles, SKUs. more it. the announced is manage All making who supplies industry America suppliers we with summer the XX-ounce production the around today, on the multi-million catching difficulty] business filtration point, added distributors state-of-the-art project a to have all and America. tight cans intended [ph], to seeing on tall [technical of been which world. to than

for our Atwater expect and eastern We and the of months a mentioned acquisition support and beyond Bars extend the partner football starting we the fits season that will increase to behind with the the our official our an expect MLB And to back, one And restaurants with Vegas we we a a Midwest, to firepower us in brands of is beer will that craft foothold marketing are remind additional partnerships, baseball parts the challenging official seltzer; Brewing, our invest you and brewer our the our before, most I and and will partnerships, marketing when excited calm that that hard ahead. be we Raiders craft investment. about starts, that XXXX their times. have offerings. And all we're have seltzers with those teams. we come and brands, are of and gives way one beer. new of recently with beer the some official in admittedly impact. in we underway, Las extend that of you partner for team craft produces announced new even and continue speaking official it the partnerships XX% We I'd in beverages entered of preserved that completed new As domestic excited

seen are position managed with based by And now, and in over in pleased business done, our Even Tracey on are have maintain plans have midst uncertainty strength the iconic we above-premium the we and financial expand and We how have such what our long-term. of pandemic business the brought short-term, of what the to on bureau. our intend for brands, the I’ll the to confident the coronavirus we for beyond it highlights. we pass the grow

Tracey Joubert

and Gavin, the cover you, consolidated basis, everyone. on Thank hello, will first then outlook. move regional I a our and to quarter

and With to the on this or resume continue impacted to current in reinstate be on be not this by we environment, But the conditions at continued how trends giving we stabilized, have the not the forward visibility future. the do time. will We uncertainty guidance. to once we determined visibility we in coronavirus expect believe guidance give will additional we have perspective offering

So to decreased this currency, channel, remained mix in largely Net on-premise in sales the major result closed across implications along markets. to revenue quarter. extensively which the declines, negative constant quarter, with in all volume brand XX.X% recap principally due during

just globally U.S. XX-ounce in a cans, under-shipments hectoliter higher consumer supplies by in the Gavin Canada, brand to dynamics by reflecting constant continued U.S. as well and as caused partially mostly mix mentioned. were offset the basis net and in the shifts market per on Additionally, U.S. boat sales due Net various position QX, to our the than Canada. paper the impacts increased in pricing pricing net offsetting a negative positive of effects These and currency, during more constraint X.X% coronavirus. that volume due

the Europe, higher as on-premise location an our XX.X%, reopening while shipments and of an Specifically, on-premise of the closure products unfavorable as the unfavorable notably on-premise, XX.X%, US, our financial gradual in timing the shutdown on locations, in lower Brewing. contract of and Worldwide cost property a offset deleverage, driven volume volume these as our spending a decreased cost per mix volume. and Underlying timing the had example, by that of impact towards a the on Golden has X.X% well XX.X% elimination adverse resolution of basis, impact the the end had currency of mix. our by on-premise many skew and establishments been activation constant-currency increased MG&A Underlying channel and brand volume reduction decreased constant brand driven appeal geographic partially of tax Colorado basis, savings by impacted hectoliter for decreased by [indiscernible]. on the areas on suspension favorable significantly brewing coronavirus, for of and reflecting

adjusted experienced platform marketing techs investments brands behind where and also timing the the of strength. we We

and lower savings delivered as our addition, was G&A revitalization we our plan. In spend cost against

in and cash million ended is portion more offset driven and mix brand favorable quarter. X.X% mix attributed In by of pricing mix increased mix net with Underlying premise the by addition XX.X% per negative on decreased than more on currency, from negative volume driven the sales increases, currency flow for paid with X.X% from expected volume the currency paid in reductions favorable America, volume paid constant As net year X.X% $XXX.X capital X.X% to be the of by cash favorable amount for North net underlying by revenue a lower cash constant half capital coronavirus basis. remaining was spending, the interest shipment sales net more In of favorable the a was in in a brand U.S. U.S., cost per X.X% the year, closures the was Latin decline MD&A result, offset $XXX increased favorable currency. the partially of impacts second In by of during as as favorability expenditures. the constant some the brand American increased partially in in and timing and new brand tax which the sales and profit in pricing to particularly actions brewing and U.S. working Underlying travel payments cash million on to net government to of our channel hiring pricing the free for constant decline six to prior U.S. brand premise. complete a unfavorable increased lower off into tax for EBITDA significant on premise. relief reduce XXXX. Canada, negative of hectoliter the EBITDA, America, spend months domestic favorable paid response volumes. as geographies, mix, off offset lower in quarter in mix offset mix in shift than U.S. underlying on discretionary and of a programs MD&A to was offset pandemic, in be X%, package X.X% decreased basis basis by and the The capital XX, EBITDA the while Working hectoliter Net strains increases driven the contract than net deferral higher from per to volumes $XXX.X basis package the the million continued premise driven shifting driven brand in volume North geographic limited XXXX driven as and by paid declines to June in the the In Canada, certain volume reductions positive lower cash declines. mitigation to on a the decreased gross well marketing various and hectoliter than price. more taxes, more the sales than take, volume offsetting shipment brand This brand in by lower restrictions. volume.

to savings deliver additionally, continue to In the related plan. we revitalization cost

evidence by reported and volume XX.X% opening XX.X% heavily premise, coronavirus. of XX.X% in margin as more volumes hectoliter, compensation. expenses volumes geographic our prior, in a brand volume at of smaller a underlying driven business, well of due impacts brand to basis, a and gross Europe, In the faces Europe Net declined is particularly from were quarter. MD&A net unfavorable cost smaller lower and incentive July per decreased and as offset items channel and in premise Europe's constant the basis as U.K. premise the well the constant hectoliter unfavorable lower result by volume, constant down by began $XX decrease pricing. as Central Financial some volume inflation, only which quarter during XX.X% the the X. driven QX European for of force seen lower until on XX.X% certain U.K. declines impact the sales not action the reopen net million full skewed currency markets. of restoring did the towards decreased closures in back driven reaches the on QX, cost as Europe, partially net mitigation margin lift sales accounts, to currency to currency, lower on reflecting mix, The of to with falling partial coronavirus impact the brand decreased high and on bigger slightly markets XX.X%, Turning on on sales pandemic in of only Eastern in end towards beginning a

to period. abrupt the of to be the in of XX% quarter in Europe the the during on-premise level the increased our on able direction we our of Europe the not position taken and approximately shift channel increase safety results, of people, disproportionately business the compromising have the a particularly the share to safety capacity following our were as premise, than expect initially gross we relative has higher on the this In off we margin. NSR, off-premise, capacity share people. and comprised while during our expect business portion significantly Based on-premise meet to actions full higher significantly closures by so measures channel in channel XXXX is Our demand due impacted to shutdown not in in losses of and XX% our

off-premise. While Europe all the nearly were from sales quarter, our in second in of

and have collection to collections steps minimize significant taken capital steps spending taking cash investments reducing in for both around are and We expense risk.

On total reopening prolonged to limited withdrew uncertainty actions profitability, to takes the continue gross our on-premise coronavirus closures our margin me by the As due or impact pandemic. and driven business financial European on of we a will March to the company outlook. have and our XXth, meaningful guidance which

our the for been off-premise continue, has volumes, Also trends spread for but the continues the guidance pandemic reopening and be continued any fixed virus due Europe. on-premise The on-premise losses we and to of will that our result, this due NSR, offset in fully in cost on-premise sufficient mixed impact the the strength release With issue increase remain [Indiscernible] The reinstate in in will the and not as industry on-premise we current time. unfavorable that us on-premise to a the of certain expect demand determined total constraints have the COGS in uncertainty take an future. volume, and the we cans losses. to to offset don't unprecedented, of shifting remains disproportionately We it in QX. not trends across channel business while negative wide losses foreseeable to will has continue expect geographies on supply all off-premise absorption at

domestic However, inventories we the due than be brand expect volume year. build the proactive, the in trends trends, shipment higher to of we our balance U.S. for as to

America expect support of our of it North MG&A, investment and well increase seltzer. like second year to as marketing our [Indiscernible] As launch to the pertains in Coors as core to innovations we half in brands the August

return factors of dependent anticipated a number of the including things of be live sports. Some the will on

lower rating compensation, current to balance in best and U.S. as in ourselves pandemic. to well long-term year best non-recurring compensation protect starting Finally, of call in the environment, comparison a prior in four the navigate we incentive from the will position unfavorable as we sheet maintain number benefits incentive particularly continued the quarter and ensure Notwithstanding both our coronavirus the our want steps put we have a some also food to vendor G&A means as last the desire year. in out be quarter we our investment-grade of is taken to fourth

capability, during credit or second $X $X.X facility pertains RCF. it quarter, the our full to our billion that was outstanding billion repaid we revolving As the on borrowing

of no result, second available borrowings on outstanding a $XXX XXth on outstanding As XXXX, under of quarter. RCF June approximately June the million resulting end commercial had we RCF of We of the billion. capacity our $X.X had the as at XXth, in of at paper

RCF, XX, May we In We capacity the main million June June the six for at we XXXX, the paper entered quarters paper not favorably revises no facility addition, a facility, XXXX, did an this commercial quarter established £XXX our therefore under covenants not In as impact £XXX in commercial in with which of the in outstanding next the facility borrowing balance XXXX. facility million issue end. second for does business. UK fiscal and this capacity our U.K. leverage incremental U.S. ratios the under paper starting Unlike had business. quarter the the maintenance but RCF financial for commercial

near of the first CapEx term and for of our suspend in year, Board reductions quarter benefits as discussed XXXX quarterly was position to by decision dividend Our improved well as cost May further the fiscal the call. the liquidity on remainder

and our approximately return hard to the savings investments XXXX significant projects of maintenance reductions such and for liquidity, this in Fort sacrificing high capital efforts expenditures without as the to $XXX our a During our that backdrop reduction financial growth well progress with the long-term we Amidst seltzer capital in by Worth million improving pandemic, delivery QX target and in remain necessary as goals invest first as we pleased business. on those announced global safety cost our advance our very are initiatives, brewery. investments in and in quarter ability performance,

ability confident While uncertainty we ahead. and achieve we the challenges success, in of continued are are lie long-term mindful that to our

our customers management uncertainty, the in of our continue and and interests board will actions stockholders. consumers, time which employees, proactive and company, this During the to of great prudent take our best are

to guided Our discipline, decisions the with company’s investment will overall continued be rating. our liquidity maintain consistent by, and grade ensuring and desire adequate our financial

on business I'll best it and remain attention, the long-term back you thank that, Jamie for the medium not focused turn actions in Our only time for and but to what is positioning doing and success. near-term, for your Q&A. With

Operator

Our question comes today Kevin with go first question. Grundy Please from Instructions] ahead your Jefferies, Operator from

Kevin Grundy

hope I pick everyone. seltzer doing strategy. wanted Hey, could that then international good about you're well. talk morning Gavin, on Maybe well. and a up you company's to the I mentioned bit And hard we U.S. little as

and market here then as then, side, brand? where respect to So sort learnings your been number And to And focused much what big believe this to launch. Light, Union, that for for sourcing share a probably have potential just on the just with you the How with qualitatively, a distributors intend Vizzy successful of you Coors a both of wouldn't rollout Vizzy it do questions you but Molson success? them I expect of to on your keep maybe can State on priority the the both talk qualitatively, U.S. just course, of have there intend share and you of folks And Thanks. how and category? follow-up ensure impressions I just you Coors in to spend Europe. early to how that hopefully that share behind then your brief be brands are it with is about

Gavin Hattersley

its of Seltzer, Coors execute in pretty morning. about Good strategies And Seltzer And being well got we Kevin new two on not same Kevin entrants Light a side. Vizzy, seltzers applies all are in concerned. we're we're also and Obviously, and seltzers, smart August. these very then focusing clear first foremost, for Thanks, how ours. hard Coors yep, which and here Look, we've April Coors its we launched we're

From for seltzers we've clear room to we're two be clear solutions. multiple it's -- differences that brands huge this of entrants. and our is that perspective, think with going sure seltzers our a there's multiple I very segments segment, making hard and got point

on got has acerola is, antioxidant campaign, we with comes People and well we're week what and TV to that to in on difference video is and will in pandemic are its which actually obviously play Mountain change, and is point first high turning of difference, confident consumers best best social top Rocky Vizzy based promising. this is. for that just the we're of heritage. a -- a Coors And And very this based continue seltzer great like the end, proposition cherry in a seltzer resonating And our clear of a to point on online then water it's clear Coors the with freshness very vitamin product brands so and a we're is kicked to this known product, It’s it and very off and the Vizzy, of demand also its the from course. the space resonate signs August. with Kevin. with is partnering fit that know trusted tasting testing, mission, coronavirus early a got foot hard brand So seeing well. C, particularly you

as being the everywhere, sourcing certain big we category, slower of beer obviously within craft mean, seeing coming premium include the items seltzer at beer, coming coming category. segment. From it beverages from sources the obviously, is sourcing right is coming locks. of moving view, It craft be malt majority of the is be and should which which of of space faster expense beer is now it a that flavored very far FMBs positive and From As seltzer from moving, underperforming is but look category for coming and and hot the [ph]. beer from are beer which as point I -- shouldn't economies would outside the shelf concerned, from

half well concerned spend are marketing our as to seltzer second opening of -- and behind said in you increase a the our Europe? last the and spend as going second of chunk in a year, assume be far in of follow-up can her Tracey the you had Vizzy is remarks, expecting said we year our that As launches. on will then that And the versus you decent half Coors

Kevin Grundy

mentioned well. that the is company you seltzer -- Europe as just That category the hard in Yeah. pursuing

truly Europe Western that they're has So seems in domestically to announced White focused. be Claw investing

perhaps the of plans how U.S. on company make an investment opportunity, Just market the and big to to there? comment the category relative behind the

Gavin Hattersley

around there, close chest Bay a going the seltzer Europe signed Miami of assume in other plans you you entrants there. Bay. can some bigger the bit Bodega a Europe, showing to we to up But it about Cocktail’s have our with the first, Bodega been -- beyond little will keep market one be just haven't early recently Well, my that in we know, seltzer I'm we Kevin. because with its into deal of public

Kevin Grundy

luck. good. Good you, Very guys. Thank

Gavin Hattersley

Thank you. your from next with Guggenheim. question. go from Laurent comes Our Please Grandet Operator: question ahead

Laurent Grandet

Hey, Gavin good morning, and Tracey.

So me. two questions from

is for right The [indiscernible] sales first regarding reopening Europe us size one, the the inventory started typical but [ph] of of give online. entrants the the significant as X? reopening recovery your happening. July know in you is I level UK that since UK, Could And please -- channel? what’s

Gavin Hattersley

Thanks.

into Europe, out started Central up Europe of XX% up opening, And capacity. you concerned, – the second of Central level as Europe of a divide Central Western Czech open much it the, was sort From -- Croatia, non-existence were restaurants in view, were particularly in onpremise level can of hit quite and social so to opening. Europe. level And has reduced we been far in Europe on-premise operate above they've of Republic, the that quarter. sort obviously impact restaurants pubs U.K. and than quarter. most of for the and pubs XX% of in procedures at like the Obviously, very pretty tourism the – XX% the So, quickly hard is on. second processes Volume sort in that of to we distancing and opened obviously up seen but because in lower capacity that in point as is and greater we've this got. and got they countries

at have up I lower July think on levels. but again lower and and same we again – a Xth and volume weekend on-premise proportion started of capacities outlets opening seen scenario, reopen, decent

for concerned this As kegs far Europe, on-premise in is both supply as U.K. issue our at an the is not and inventory point time. in Central

Our off-premise, surge American constraint the in seen which a has seen as is business. we've similar North more in the

Laurent Grandet

Lite segment. really about U.S. question academy the and And the Thanks. second and my beer is

more your some of we're are wholesalers entering brands. a actually expect down as to So that this we recession, and affordable consumer into saying could trade we

past with confirm. have something you can share do some that you And it that could So, you is recession experience us?

Gavin Hattersley

support this down seen No, yet, trade we of segment. a haven't certainly into premium itself around had time that seen actually lots both haven't for economy our premium lot we strong been the and

as have recessions above of have seen folk, actually seen which come and actions we for – ongoing time down. to brands support premium national prior taken support terms traded that might that for we've unemployed focus governments same but at given for still the have but in some date. of haven't Now In the the premium some

we're not it. this time seeing at point So in

Laurent Grandet

Thank Okay. Good much. luck, guys. very you

Gavin Hattersley

Thank Operator: from Lauren Our from ahead question. with Please go question Lieberman you. next Barclays. your comes

Lauren Lieberman

morning. Great. Thanks, good

know favorable some hectoliter support was know, quarter in forward. but my we and had all think going half perspective thing by going that and the some marketing to as a how the know, up I quite that from so on wanted to about you Thanks. to hoping on portion per just not the you're per COGS color good think the in doing. the tax benefit a earnings to how the about forward Trace First math of quarter, was you think property you to innovation and I think about upside I get COGS hectoliter. was, one-time situation. that But, you mentioned

Tracey Joubert

constant as currency and we COGS Yes, Lauren. by seen increase X.X%. underlying Hi, hectoliter per

portion the And the And had resolution property had XXX points. so in the a basis was And volume XXX account obviously line. cost we favourability well. to around offsetting we had then which from tax pay, just you thank coming points. there, appeal And we then would also we of under and had favorable basis deleverage, COGS the for which that savings, as

for tax an So, and basis unusual – the XXX unusual to for the points an yes, off. hopefully, you. notice called is property – to why notice is just it sorry, huge helpful just Lauren, And we that that in is that appeal – that's is sitting

Lauren Lieberman

But, much, deleverage plans. than modeled. you again, most so then give even may platform, think, if the that volume the were of going amount new restructuring benefit, more that of And could just term have costs So the longer color tax know, a have you – very on better, cost there your productivity ex-out come much were us the bit very, maybe I or is. the with in the that – and people through, things initiatives part actually well on be would savings strong, I there little were

looking So give prove support lot how much that P&L a and EBITDA sticky? cost growth can of would savings Because ahead. that to the

Gavin Hattersley

were our give pleased a maybe it. how couple to then Trace just Lauren, toplines add can very in the plan circumstances But, notwithstanding going, is and of with color we're I'll which revitalization were the what operating. of of are time. all how operations a I'm and functioning during mostly enormously -- which very, but our is people, proud supply clearly chain difficult actually, procurement very

time are operating as and can some breweries been quite Our remember I've I for them now. efficiently as here

far And our helping certainly is revitalization cost on track. plan, as COGS. as is that So, goes,

Tracey Joubert

we’re million mean, said, track mentioned target. well to we’ve next on for I $XXX the around years three Yes. and savings as Gavin hit the cost the

Lauren Lieberman

sheet question. in you’ve when the as That's could guys quote, about quite we if wondering, we're be it just I bit COGS And said, ask other the transformation you about. more mean, second you're a flexibility great there's there's plan; But we think and with I balance you if standpoint. may a there's Sheet been strategic clearly, seeing have could talked that Okay. then, you great. progress know media I have balance I making just that in from just debate Europe. I’m assets and the about not -- strategic review, give been around, that

distribution still And the may is believe I within thinking of if non-core a example, I'm just a about have, you it the this kind some maybe legacy which for plan on guess, is, flexibility you're curious, one business, like So, you sheet. context give transformation of balance position. bit of assets I more

Gavin Hattersley

rumors Lauren, that all just let goes to on get speculation into and going engaging hypotheticals one. not take of me and I'm the outside organization. in our that

long just the better folk, economic put coronavirus by for it learnings we right to company, other we're Putting to Right? navigate downturn learn the great better to that people so first making like I've Our a distribution and gives in business about have be today global Denver, during us our to the two take folk makes the now be know other that first. guided spoken on will significantly distribution and decisions in position mitigating around continue our term what and our our the and business believe, help distributors we risks. position it's desk, operations principles us pandemic actions the – secondly, our and the it our sales partners the speak side to and And this our as then, the regards love And in term. short succeed ensuring we country. to of to company

Lauren Lieberman

Thanks really I appreciate a lot. it.

Gavin Hattersley

Sure.

Operator

from Teixeira question next from go comes JPMorgan. Andrea our And Please your ahead with question.

Andrea Teixeira

you. have And flat question to cases. of And levels sense launches, the is marketing words is see that seeing strong? performance especially increase promotions you in of or off-premise in a seeing go resurgence the higher, the make April? My second I expect to in markets you on are uptick and the consumption I launch, half. so of or what back doesn't the should in half like now we well. in first you. states the in Thank second hope made a on because same is it go been And point all just March to so versus through in we of the marketing due you a Should words to XXXX about other seltzers as year-over-year spending even the or at the Thank other and level that part saw sales half clarification home

Gavin Hattersley

Thanks, Andrea.

We delayed We obviously made did behavior our products messaging. channels spend relevant At The behind basically significant with spin core second consumer Hulu, and to certain media Reddit Blue our and Moon just other and behind and and beginning marketing prioritized spending take relevant Miller media the choose ways, consumers fundamentally, we and pandemic, big the some your resets and we Twitch overall channels trusted spend to change. shifted and stores, in question our Lite quick to I'll Light. action our shifted due also consumer to. migrating delay our spend. first. to brands some were chain that took in like of YouTube really with sure consumer We the three we products, delayed right-size were we on we like So Coors changed new where

of tip of with the In Coors could like America short Lights number connected both programming well new and the very fact, we Miller consumers. beer which a which use campaign created virtual jar notice, extremely Lite’s a at significant

our Top top So focus big has maintain of Mind awareness been to our brands. of our for for

last of – is remainder half year. the than as the Tracey said, the our the marketing year concerned, we and spend higher in second expected year far of we be as second As half of discussed to this

pressure in like year to as We're us, Lite Big brands Coors can, Light. we've second and pivot, Miller n crowd shown sure that we've got make just And the our shown going your trusted Blue innovations Vizzy behind. higher that A remaining that obviously answer we Coors the as in XXXX. to and to question this expect of we – going awareness seltzer will we're we'll now draw as But So Blue our what's can in happening new be and months, directly we right the six months six change, if in a appropriate. strong things behind we've around and monitor LightSky. QX, Moon - Moon marketing than

a question quite As it's concerned answer. question far tough first as look your to is

that, states that off on-premise saw the certainly in continued openings of in week some seen opening premise but trains We huge haven't again and March, spike we've then – in we outlook seen has closings the continued, one that of a

Andrea Teixeira

is super this – helpful, to Gavin. just And

total not say increase we'll like will up, so when should that these say, much margins cost be half? just see discussed prior half, second or that clarify, you will other the actually second to MD&A pressure marketing you just say question under in be fund we pressure, or as Just the words savings of will kind in your just in more in or the to

Gavin Hattersley

to items answer flow obviously in savings half which that on is going half of revitalization we're of as are second there year. some won't going through, but second – cost now to that based the beneficial ways increase know question, – definitely year spend will our marketing of we Tracy what to us Couple can which were our continue one we're this last in second one off the half mentioned, of in be the I

that, So you that's at on a should look giving specific how we're broadly not it. but guidance

Andrea Teixeira

That's helpful. I'll pass it on. Thank you.

Operator

with Vivien Our from your Please comes ahead from go next Cowen. question Azer question.

Vivien Azer

that good Thank shared hopping to follow-up here I should from a right think should be you hard craft Hi, morning. you. Gavin donor? that shelf was made be in correctly coming comment you seltzer on earlier space to think regards you you where

Gavin Hattersley

be flavored really that should underperforming brands the right. craft underperforming, apply underperforming yes shared shared beverages. there of brands relates word in out owner. that craft malt comment a should moving And And same underperforming The Vivien. exist slow morning, craft number would are My channels should to and donor. to a be -- Good various be

Vivien Azer

you sense leading curious, Thanks. share Okay. below makes because you laggard on will, well should premium think a to basis? if That and that do be it seems be category donor the as sub

Gavin Hattersley

of question said spending into all this challenged haven't into matter will an Vivien. brands earlier the back And fairly faster seen half happen can was, extensive they to premium impact year and segments assume next. the remains and at economy Not of and the trade turning consumer one sub unemployment we've we an that do, if that always

Vivien Azer

If your Thanks. consumer in I get can more. of of helpful. underlying we're starting Vizzy, to Thanks. from That's terms that insights squeeze your any because some On detail demographics one peers?

Gavin Hattersley

old. well by being is but year received Vizzy demographics, look Yeah, particularly consumer to the XX all XX by

Vivien Azer

much. Very helpful. so Thank you

Operator

ahead And from Please Steve question Deutsche go Bank. question. our comes your with Powers from next

Steve Powers

thanks. Yeah, guys. Hey,

line to above ship through on you're be the of want sense half, today. your how to but there up on that. a enter as sight to could more way we we just prepared chain shell back get bit fully are, talked to throughout more that I give might the the more quarters? little bit as thin you supply just today is in be Clearly we of you Maybe little on the here but magnitude us couple the a and perspective ultimately for are facing And remarks, as in color the a to about you more what value able a the next this stand we then August? progress to a consumption So degree trying constraints that inventories catch where

Gavin Hattersley

have I shipping said space Good are remarks in ounce you I Steve. seeing beer Look, is our higher as recent competitors can we're cans we the rates unprecedented XX than significantly Thanks for years. as it The in and mean, producing just non-alcoholic Yeah. right, referenced, and in demand as opening and alcoholic morning. my at and well.

supply And country. products to of moving had we've in across in from we tall cans, that slower packaged packs. moving XX the For faster LightSky has levels also and can, and success addressed ways. us, strong suspended more also slim this has that Moon the have added been a fulfill ounce of so wholesalers we orders pronounced the for to One balance We've the number then our adjust packages production XX for this of Vizzy can the Blue to ounce is pressure. some

will quiz some It industry moving dependent on the But us the can improve XX, the reopenings. with to summer. of respect through upon in or the do XX probably on remain on seeing ahead. situation slower those tight continue course, products impacting closures talking. we and to We like the weeks turn of standard start are And back begin to so will that is, ounce premise

our supply constraints, We making some for but specifically have suppliers also progress. did paperboard, packaging

full so remarks, I as her our As as said that's and ship they're the far I to it for concerned to is it. intention in Tracy think year mean well, -- I think opening consumption about yeah,

Steve Powers

not in but planned? and Okay. grade, maybe your you clear. is any ability optimistically remain see desire have which balance where Do If sheets your constraints it invest your given to investment I theoretical, stay at than current level, aggressively all If on little just helpful. mean That's to leverage bit more -- I that the sense could or a more if could conditions more is have under a demand point improving. to there's place competitors, you risk versus may your pressure trying some bit of of just get I’m to at such [ph] unexpectedly have inflection. just be more underleveraged you which encounter of much whether we a patient get

Gavin Hattersley

I of the But, of money where what as going to XX-month hasn't are a don’t trailing from certainly Tracey behind second to think EBITDA constrained [ph] us say on the basis end it it investing in -- amount it a and answer And, system and behind couple ways. are. both a we board point full can very to portfolio. a to relates neither support and ratios we planned were quarter the be canning expansion Worth made of our our we've entrance. Fort into filtration those invest a meaningful necessarily of line year ourselves that successful of have this and

or can also from in that's conclusion we're year based it's back think do increasing is you current our that plan the to the same the that fact current I marketing draw spend of half circumstances. our on the

the comment saying Steve, hobbling long-term. not want just long-term. for us I'm need invest you things able ratio our invest I So really believe in point we plays, Do to but are on think successful doing quite what where my and That short-term, about is we to to for to be the... the the we to willing for

Tracey Joubert

Yeah.

making at progress and at an, the our ratio we’re agreed ratio obviously a X.X So different. we’ve really XX-month -- of at is of trailing leverage ratio end look quarter-by-quarter June, I been debt-to-EBITDA good obviously, net that on even -- leverage around the I’m or times. if end But, is again basis,

year, end So, year. end the that's from of the an the improvement of last

continue to we'll to our ratio grade paid at rating. as on focus it and desire debt maintain investment is debt So, leverage our on

Steve Powers

Thank much. That's Great. you all. very

Operator

with Bank from go America. Bryan And ahead next of comes our Please your from Spillane question. question

Bryan Spillane

Gavin and operator, and morning, Tracy. you Thank good

Gavin Hattersley

Good morning.

Bryan Spillane

Hi.

to my coverage two to of are question marketing back across spend the the spend to guess plans is components of universe, the there's companies food to second planning related marketing and it. kind in I just to half shift half One So beverage there's the a of year. also our year, the lot and of have who is, their

you're the kind a does or, channels, even competition for And there's the cost curious demand you're the if thinking back in lot that more? be of of effectiveness be, creating just second the not of half going maybe time. advertising So, spending that if how a to given more and in a that the spend of for it lot any of being airtime inflation would then year, it about short curious concentrated period

such or do of, back just how just you on So unusual planning of think to a it's that kind sort you're given spend investment how plan? catalogue just to have the about return

Gavin Hattersley

seen because as answer where Brian. be there many first haven't some are we second sense. half I industries any the the short sense think, answer make On Premise their example, haven't doesn't in it from no, still marketeers we it that, that To upping are no, Thanks, impact national is so perspective. question, your spend trends an would seen makes

the saw late marketing programs effectiveness tip the some quite showed campaigns we've is and as actually the spend week this them Light referring I'm some as was in [ph]. time or last virtual on quarter seen in we use part week a that our America and Coors second the like results to second that beer in The the and effectiveness could of Lite's jar high some of the earlier Miller

expect to the second and I would effectiveness worse coming. case actually than on marketing that given programs not So, got half, return that investments be the we've the getting in better

Bryan Spillane

the Thanks. shorter plan? so in fuller half to spending ended follow or reason dependent season, all year more sport plans in back coming If at of of NFL your the the one with are live just if your, Would like How a I schedule on -- spending up it. the can the affect back on half. there's up some back a in that no for NFL much

Gavin Hattersley

probably it but also Yes, affect it affect spend spend. would we much would would I mean it would where we how

and marketing consumers very where in shifting so Our to quarter have fly, spend pandemic a our the on given been place weren't that second are. we adjusting into team speak, nimble expecting our

we've and be NBA change underway we're they and So to hockey it third starting season right to absolute the and be on we got would NFL will obviously that target, and got able on based Baseball adjust second full the nimble But now to quarter was got in effective expecting did the majorly I've I've what confidence that us starting. should we dependent in or been not. whether

Bryan Spillane

Thanks Gavin.

Operator

Evercore. And go Ottenstein our question ahead Rob from next Please with from comes question. your

Rob Ottenstein

what you topics. you in percentage movement situation that to so it very quarter, The I'm canned hard is percentage, quantified big or the positive was of the and Great. and just you las last canned sales due to kind have out a your of to that's and what canned that want your year driving to much. know were on seltzer year that’s I couple of go us ballpark. you Thank stocks, in mix. back side in of this assuming What remind business canned maybe could think

Gavin Hattersley

Look point sales I lost a from of view. Robert. Thanks, mean a from

obviously Now stocks I'm quantify shelf the of methods Out and whole the out higher that the of because stock be tends of latter There's that works. wholesaler to have on right. sales. than obviously to the the going at mean of two system not determining and I we some lost out way stocks of former are

are some many pointed we've then lost when I'd is many, package available. I'm in retail type we they have So, more have we shipping consumers that been sales, quite between package Robert. shifting have years, types we that that sure preferred also not canned beer but

as concerned look, I the is not can to refer -- I as far mix historic I'm XX-K. As think, you our numbers the in

as now. can not into a concerned, I'm now. far sensitive that is and going As little I can that the bottling to just right feel get it's competitively

we're a there's quarter lot have come business. As North The the because pretty a cans reason that and strong in assume well. Europe, would that too in same on came the bottles the American for low off, component second you off can premise as in

say moment are canned. growing at to excited We ten fastest the are SKUs that our top

Rob Ottenstein

price to can in the half do of situation, extreme increase the how year, with on dealing to of next the or terms in in have Just going second year the cans? much you given think, see you're the shortage

Gavin Hattersley

an or Yeah. view. costs offset The Robin, we don't to I Africa, obviously, talk that. is, aluminium point a with say supplier been of tremendous ideas, is about input partners pricing an though, also of as us is also from it South to source our relates to a a in from an can Middle to would Africa partners the you or from price And, East. uptick bit from have

partners our this perspective. superb been from have So

Rob Ottenstein

even on, time their Great, shelf a saying, they Others core sets retailers and something the to great. then in just product. a seltzer, happen tough getting year fall. say follow-up a lot about mixed the expect a in to Some terms going And that year. messages Can are in where you suppliers front? this it's not on new just of bring tough, of talk one

commitments kind I hearing on that. of sense you based your So that top to from that around space hear you're retail that, And partners? what love shelf on is the of your from then,

Gavin Hattersley

for off a and very busy sell any retailers, strong you're our is we've a easiest in to innovation. I'm we've with that not distributor are Hey. the the to start. the of the to success, then Coors to received that seltzer reaction very launch if orders strong. And to Robert throughs that. received. very off our get Alaska starts we're from initial strong chain going placements that time pleased and we've or The indication off moving particularly notwithstanding customers new Yeah. right. very It's chain from But

Rob Ottenstein

Terrific. much. very Thank you

Operator

Goldman Please And question. next our proceed Sachs. comes your question from of Bonnie Herzog with

Bonnie Herzog

Good just asked maybe want you. little Thank spend, Hi. marketing circle but few a your morning, everyone. actually on differently. asked a to back I questions,

quarter. you the in pull lot back a First,

maybe on of see a from typically even guess helpful guess line since if to be your lag a I your so trends I any potential in effect this or I far. Maybe QX, disproportionate on signs top you is hear. impact would there spending? see some So wanted have negative guys to understand color you on a you, QX July, in risk,

Gavin Hattersley

Thanks, Bonnie. Look, North Europe. remember cut both the is when MG&A America and

that obviously back, the our so have fact out premise And a job in in we to it done has was Europe. for pulling months in index U.K. spend prioritizing nonexistent the three of back on and spend of And do pulled based on Europe the tremendous year. team the we

very question has High America ends growth. And No, As response marketing Miller in effectiveness in I North far in opposite data, earlier segment share that in the corporate -- our actually actually brands? said share you fact, our think Life think is the to behind XXrd segment look it the an I second hurting the quarter. as have been had been share, I its consecutive quiz positive. deliver when like And highest segment it at ever I

of we're in So opposite. somewhat the fact, -- we're of seeing that; seeing not the

Bonnie Herzog

us been been Gavin, down in weeks, trending again. have has openings as can in shutting we're just -- July maybe, you few trends of you share the the a sense how give things your business are to give how granted last seeing some

been curious performing? how business just to has your hear So

Gavin Hattersley

Bonnie, was that But years went middle helpful trends of short don't pandemic. in sales terribly we helpful trend we is the given believe the We many quarter ago. we don't, gave because the it Yeah. term last giving -- the term off right it thought we market. to short

So we don't plan to give that.

Bonnie Herzog

just if this shortage And sort of an have during color canned it industry it'd an Corp, giving industry be if more of period little venture a fact kind helpful you with advantage for because question, entire one us relationship. joint give wide I'm just difficult if bit may And situation. Okay. curious be a might obviously if on issue. the Ball that final it's you could maybe back of on in you quick a I so because circling the

your not may help or how Corp? Ball you giving again, just just relationship that So wondering Thanks. with may I'm you

Gavin Hattersley

cans Yeah, has us of tremendous globe. Bonnie, just Ball like we’re around and a during us pandemic constrained for constrained, the been they're look this they've helped partner

enough So during can't say positive time. our partners I this about

is as produces the obviously toll planters toll And it concerned, this far the efficiently. that primarily and As primarily would at giving Keystone and peers as point Queensland hard had running and be an like and is large running that us packs, advantage as demand joint it the we is that venture in But for effectively as time. we've that fast still they're can. plant our given very huge constrained,

Bonnie Herzog

you. All right. Thank

Operator

next with question. your from Please ahead MKM Bill question from And comes Partners. our Kirk go

Bill Kirk

that period. If I July the but minus know the you Hi, in ended won't ended is math kind for me help the imply U.S. reported June maybe volumes started in and that does volumes brand thanks the were and XX April in you everyone. May quarter at fine, trends inter give the exit rate and minus that's my minus of year-over-year, just for five, quarter at U.S.? one roughly brand with that

Gavin Hattersley

said that few volumes weeks we Look, I and And think that in global first sequentially five. we given July, obviously, up at did down say was brand the can ended XX improve. we our

the do retail but to going we're done give sales. month can not math You as month you've to clearly before,

Bill Kirk

Okay. Thank you.

Gavin Hattersley

sorry, answer gentlemen, I'd for the question back to ladies to and with conference And Operator: April, April. management any remarks. session. down sorry, XX conclude call over closing like turn and we’ll am Yeah. that, today's was I

Greg Tierney

us you everybody. Sure. Thanks Again, joining today. thanks for

our to and segment measures XX-K point forward non-GAAP you to you details has both to any U.S. Thanks questions. forward Just Greg has as and again, so Look all reach you. as reaching all wanted reporting the to soon. to have remind Please speaking is again hesitate GAAP of please and everyone us looking that been and -- on to then much. folks not This out do filed immediately. to our well if Tierney

Operator

with that will thank conference gentlemen, you conclude and today's for call. do We Ladies attending.

disconnect lines. You may your now

Molson Coors Beverage (TAP) 30 Jul 202020 Q2 Earnings call transcript